1994 (1) TMI 262 - HC - VAT and Sales Tax

Summary

Issues:
1. Rectification of assessment order for the assessment year 1987-88.
2. Refund amount adjustment for the year 1991-92.
3. Notice issued by the first respondent.
4. Forfeiture of the refund amount under sections 30-B and 30-C of the Andhra Pradesh General Sales Tax Act.
5. Compliance with rule 50 of the Andhra Pradesh General Sales Tax Rules.
6. Interpretation of section 30-C of the Andhra Pradesh General Sales Tax Act.

Analysis:
1. The petitioner, an assessee under the Commercial Tax Officer, disputed the tax demand for the assessment year 1991-92, claiming an excess amount had been paid towards tax and a refund was due based on a form "C" refund order. The first respondent passed an order rectifying the refund amount without issuing a proper notice or allowing the petitioner an opportunity to be heard. The court found that the rectification enhancing the assessment without notice was unsustainable and directed the petitioner to submit an explanation within two weeks regarding the proposed rectification.

2. The petitioner had paid an excess amount towards tax for the assessment year 1987-88, resulting in a refund order. However, the first respondent failed to adjust this refund amount while determining the tax for the year 1991-92, leading to a demand for a significant sum. The court deemed the actions of the first respondent as improper and directed a proper procedure to be followed for rectification and adjustment of the refund amount.

3. The notice issued by the first respondent to produce books of account and related documents lacked the necessary elements of a show cause notice required for rectification under rule 50 of the Andhra Pradesh General Sales Tax Rules. The court emphasized the importance of providing a dealer with a reasonable opportunity to be heard before enhancing an assessment or imposing penalties.

4. The forfeiture of the refund amount under sections 30-B and 30-C of the Andhra Pradesh General Sales Tax Act was found to be unjustified as the assessing officer did not conduct a proper investigation or provide findings to support the forfeiture. The court highlighted the need for due process and factual investigation before exercising powers to forfeit any amount collected in excess of the tax payable.

5. The court analyzed the provisions of rule 50 of the Andhra Pradesh General Sales Tax Rules, emphasizing the requirement of issuing a notice and allowing the dealer an opportunity to be heard before enhancing an assessment or imposing penalties. The failure of the first respondent to comply with these procedural requirements rendered the rectification order unsustainable.

6. Regarding the interpretation of section 30-C of the Andhra Pradesh General Sales Tax Act, the court clarified that the power to forfeit any amount collected in excess of the tax payable or in contravention of the law can only be exercised after a thorough investigation into the facts and circumstances of the case. Since no such investigation had taken place in this instance, the forfeiture order was deemed unenforceable.